Yep. Mint.com ftw.

10/18/2011 2:05:09 PM

I have:

1) Mutual funds with my bank
2) Shares in two Bahraini banks on the Bahrain Stock Exchange
3) Retirement Plan with my bank
4) Condo in UAE half paid so far
5) Life insurance policy (endowment type)
6) Buying land soon

10/18/2011 2:19:52 PM

If I already contribute the maximum amount that my company will match on 401k, should I put more money into 401k or roth after that?

1/10/2012 1:18:27 PM

roth ira then 401k unless you really think your tax bracket will be lower in the future

1/10/2012 1:48:04 PM

^

1/10/2012 2:09:47 PM

Is there an income limit for Roth?

1/10/2012 9:23:26 PM

Income limits

Congress has limited who can contribute to a Roth IRA based upon income. A taxpayer can contribute the maximum amount listed at the top of the page only if their Modified Adjusted Gross Income (MAGI) is below a certain level (the bottom of the range shown below)[citation needed]. Otherwise, a phase-out of allowed contributions runs proportionally throughout the MAGI ranges shown below. Once MAGI hits the top of the range, no contribution is allowed at all; however, a minimum of $200 may be contributed as long as MAGI is below the top of the range (e.g. A single 40 year old with MAGI $119,999 may still contribute $200 to a Roth IRA vs. $30). Excess Roth IRA contributions may be recharacterized into Traditional IRA contributions as long as the combined contributions do not exceed that tax year's limit. The Roth IRA MAGI phase out ranges for 2010 are:

Single filers: Up to $105,000 (to qualify for a full contribution); $105,000–$120,000 (to be eligible for a partial contribution)[5]
Joint filers: Up to $169,000 (to qualify for a full contribution); $169,000–$179,000 (to be eligible for a partial contribution)[5]
Married filing separately (if the couple lived together for any part of the year): $0 (to qualify for a full contribution); $0–$10,000 (to be eligible for a partial contribution).

The lower number represents the point at which the taxpayer is no longer allowed to contribute the maximum yearly contribution. The upper number is the point as of which the taxpayer is no longer allowed to contribute at all. Note that people who are married and living together, but who file separately, are only allowed to contribute a relatively small amount.

1/11/2012 9:00:03 AM

also, until april you can contribute to your Roth for 2011....so if you didn't contribute at all in 2011, you can put a total of 10k in (5k for last year and 5k for 2012)

1/11/2012 10:28:04 AM

thanks for the responses so far. I'm pretty clueless about these kinda things. What would be the best roth fund for me?

1/11/2012 5:04:14 PM

^
http://www.bogleheads.org/wiki/Principles_of_Tax-Efficient_Fund_Placement
One strategy is to put high dividend paying funds in roth's like REITs, dividend aristocrats, high yield corporate etc.

1/12/2012 1:42:50 AM

I started out with VFIFX. Low expense ratio with a good company. Doesn't get much easier than that.

1/12/2012 11:56:43 AM

Just did my Roth IRA contribution for this year. Been having a Roth for 8 years now. Have a 401k through work and TSP (feds). I also have some other mutual funds and some stocks. People laugh at work when I talk about retirement but they are the ones that are never going to retire because they put everything either into ultra safe or dont do anything until it is to late.

1/21/2012 4:12:19 PM

I should really look into doing this since I'm looking to get a real job in the next few weeks instead of trying to scrap by. Its going to be awesome once more having a career job and get some money even though its an entry level IT job. Waiting to hear back this week if I got the job, probably expecting 50-60k, but I still haven't figured out how much living expenses I'll have and what I can put away in a year since my friend said I could be promoted in the company pretty fast as long as I get certifications out of the way.

This would be my first real job with full benifits and 401k. I don't know a damn thing about investing beyond simple CD and MM accounts. I only have about 8k in cash, mostly tied up to a CD with about 1k in a savings account. I own my own car and have no debt. I feel like I'm behind on trying to save up for my future since I'm 26 with not a lot of assets. I have no plans (or wishes) to own a home and I have 4 lines of credit but barely use them; I do have a main visa with a 4k limit but I haven't even used it in the last 3 months (never got around to activate the new card).

I mostly buy stuff in cash or paypal and didn't have an actual job all of last year. Would really like to hear what you guys have on advice.

1/23/2012 12:09:58 PM

once you get the job, contribute to the company 401k to the extent that they match and put any additional you want to invest for retirement in a roth.

1/23/2012 1:54:04 PM

Is there a max with roth and what you can match with 401k? 401k is tax free right? so is roth?

1/23/2012 1:57:38 PM

401k contributions are pre-tax thus the money you are putting in is "tax-free" right now. The distributions are currently taxed when you withdraw. Contributions to a Roth IRA are post-tax money, however the fund grows tax free and there are no taxes on the distributions. Kind of inverses of each other.

Right now there is a $17,000 annual max for your personal 401k contribution. I haven't looked to see if there is a total contribution or a max the employer can contribute. I contribute enough to get the 17,000 plus my employer matches my salary 5%. The Roth IRA currently has a $5,000 annual limit.

1/23/2012 2:14:08 PM

so how do you go about putting pre-tax money into your 401k? just have to talk with HR and set it up like per payday and pull it automatically? Am I assuming correctly the 401k is with whatever bank the employer uses or can you specify yourself? (or is this even a bank?!?!)

I really just want to see how much I need to start putting away to account for the missed years and figure out how much disposable cash I can play with within my salary after I figure out my expenses.

What is a good percent roughly to put away in savings/401k/IRA and whatever left for personal use, disposable cash and emergency fund (for when the car shits the bed or something). I never really had to manage more than a few grand at a time and never really worried about this stuff before.

I just want to be living comfortably (I have very little needs and minimal wants) and not have to worry too much about finances years from now. My brother is 33 and just now started saving up money. Its sad that I have more money than him considering he had real jobs for a long while, but always blew his money away.

[Edited on January 23, 2012 at 2:40 PM. Reason : ]

1/23/2012 2:37:24 PM

Yes, talk to your HR or benefits coordinators. Many companies have an agreement with a specific financial institution and you log in via their site or some internal linked site and you can adjust your contributions to the account and what it is invested in etc. Really depends on the company about how they do it and how much you can control it though.

A personal Roth IRA can be setup through Vanguard (I recommend them, especially if you want a low fee, hassle-free, hands-off approach).

As wlb420 said, I would first start by matching what the employer matches on your 401k, be it 3%, 5%, whatever. I would then max out your Roth IRA. I set mine up to be withdrawn from my bank account to my Vanguard account 2x a month automatically.

That's what I consider the responsible required minimum if you are working any job with a half-decent salary. Beyond that is up to you. If you have few needs and minimal wants like you say, run some calculations online with paycheck calculators to check the impact of higher 401k contributions. I'm married, my wife works as well, and I have 5 years of raises and promotions behind me here, so it's not an apples to oranges scenario, but I max my 401k and my Roth IRA and live very comfortably still. Depending on what you were pulling in previously, you may be surprised to see that you could take your contributions up pretty high and still have a very healthy take-home pay while starting to build-up that retirement fund at the same time.

[Edited on January 23, 2012 at 3:11 PM. Reason : ]

1/23/2012 3:10:42 PM

well what I was pulling in at my 9-5 marketing job before was 40k a year with no benefits or 401k, just straight salary (was when I started college) but I paid for my own tuition and expenses (with a little help from the parents of course), then I decided to do my own business, which basically wiped most of my savings out. I was making quite a bit of money, but I was spending it just as fast; specially in Ft. Lauderdale/Miami area.

How much does taxes and SS take out of paychecks now days? And I can reduce my tax burden by donating money to charities and such right? Probably a whole other set of questions for another thread I suppose. heh

1/23/2012 3:26:11 PM

Agreed. ^^



SS + Medicare is 7.65%

[Edited on January 23, 2012 at 3:36 PM. Reason : damn formatting!!!!]

[Edited on January 23, 2012 at 3:37 PM. Reason : suck it formatting]

1/23/2012 3:31:01 PM

lol, gonna have to start charging fees...

1/23/2012 3:35:03 PM

Quote :

"And I can reduce my tax burden by donating money to charities and such right?"

you certainly can; however, I'd reduce my tax burden by contributing to your 401k first. paying yourself and lowering your current tax burden at the same time is a nice combination.

1/23/2012 3:38:08 PM

Yeah, if you donate $100 you save $25 in taxes, but you still just gave away $75.

1/23/2012 3:40:42 PM

Quote :

"you certainly can; however, I'd reduce my tax burden by contributing to your 401k first. paying yourself and lowering your current tax burden at the same time is a nice combination."

Oh ok, that makes a lot of sense. So If I got paid 50k and put the max in 401k personal and IRA, I'd only be taxed on the 28k at the 15% tax bracket?

Quote :

"Yeah, if you donate $100 you save $25 in taxes, but you still just gave away $75."

Oh wow, didn't know this, though you got the full tax write off and figured there was some sort of limit. What about donating stuff to good will as a tax write off? I donate stuff to them all the time, but never really think much about it as a write off later on. I'm guessing its a percentage?

1/23/2012 3:48:22 PM

^^Exactly. I don't ever look at donating as lowering my tax burden really. I donate items and money to charity because it's better than throwing things away or because I care about a certain charity or cause. I then of course make sure that I claim it on my taxes.

I never donate (especially straight money) solely with the intent of lowering my tax burden because you technically come out behind.

^ A Roth IRA is contributed to via after-tax dollars, but yes, if you did 17,000 to your 401k this year, your taxable income would be lowered by 17,000. So, you are saving money for your future, AND lowering your taxable income.

For a simplified example, if you get taxed 25%, then looking at $100 of pre-tax money:

-you can take it home as $75 after taxes OR
-you can invest it in your 401k at $100 with no taxes taken out and that money is essentially ignored in your taxable income figure.

If you donate $ to charity, all they do is then give you the taxed portion back on that bit of money.

[Edited on January 23, 2012 at 4:01 PM. Reason : ]

1/23/2012 3:49:42 PM

Is Roth's 5k/year limit per person? If i put my wife's name on the account, can i contribute 10k?

2/4/2012 2:14:13 PM

As far as I know she will need a separate account. That is how we have ours.

2/4/2012 2:18:41 PM

But it would be 5k/ person even though we file our tax jointly?

2/4/2012 2:47:51 PM

401K's been flat for a year or three, so, I'll live like a king in Eritrea on fifteen grand.

2/4/2012 3:28:49 PM

^^Yes

2/4/2012 3:32:40 PM

Quote :

"And I can reduce my tax burden by donating money to charities and such right? Probably a whole other set of questions for another thread I suppose. heh"

I would also note that this doesn't really come into play until you have sufficient deductions to pass the standard deduction threshold. That is, the government already gives you a standard "write off" of $5,950 each year in your taxes. So if your deductions don't reach that threshold, you won't gain any tax benefit from donating to charity. Most people who do itemized deductions (that is, calculate their deductions instead of taking the standard) tend to be homeowners who are allowed to take their home interest payments as a deduction. Personally, I took the standard deduction until I bought my first home even with donating to charity.

Quote :

"I never donate (especially straight money) solely with the intent of lowering my tax burden because you technically come out behind."

Agreed: don't donate money simply for tax purposes. Do it because you support the cause and then think of the write off as a government subsidy for making it easier for you to give money to charity. As mentioned before, better to reduce your tax burden through the 401k before you resort to playing with deductions.

2/6/2012 1:12:21 PM

Quote :

"If i put my wife's name on the account, can i contribute 10k?"

Heh. I'm always amused by peoples' interpretations of Individual Retirement Accounts

2/6/2012 4:05:00 PM

I was talking to a coworker today about taxes and retirement stuff came up. He doesn't understand why I utilize both a 401k and a Roth IRA. He told me that his friend, a "financial planner," convinced him that he shouldn't do both because "it's like driving with your foot on the brake and the gas at the same time" due to the way one is tax deferred and one is after-tax dollars invested. /facepalm

My guess is that this "friend" probably told my coworker that to get him to invest in something else that benefits this friend via some commission or operating fee...


[Edited on February 27, 2012 at 12:17 PM. Reason : pronouns]

2/27/2012 12:04:34 PM

Hah, probably life insurance...

2/27/2012 12:09:07 PM

Quote :

"it's like driving with your foot on the brake and the gas at the same time" due to the way one is tax deferred and one is after-tax dollars invested"

lol, that's exactly why it's advantageous....but it's really not that uncommon for people not to know stuff like that

2/27/2012 12:34:26 PM

understood. It was just a few years ago myself that I spent a lot of time trying to learn at least the bare minimum to get our retirement goals on the right path where I feel they are now.

Mainly I just cringe when I hear people talk about what some of their financial planners or personal finance guys/ladies tell them when, at least to me and my minimal knowledge, it often seems like bad or misguided advice.

2/27/2012 2:20:41 PM

Maxing out my 401k is how I lower my taxable income too

Between that & writing off the interest I pay on my house, I put myself into a lower tax bracket

Maxing my Roth Ira doesn't seem to do much to help the tax situation in the present tense but I do it anyway because it's part of my retirement strategy to pull out what I need annually from my 401k to keep myself in a lower tax bracket & supplement with my Roth Ira to get myself to the income I want.

Another overlooked way to lower taxable income is contributions to an FSA or HSA. You put pre tax dollars in there & not only lower your taxable income but also give yourself an automatic discount on whatever you are spending it on because you're using income that never got taxed.

I lol when I do my taxes because I have a flimsy idea of what I actually make each year. It's kind of a surprise to me because I pay myself in other ways before I get cash in my pocket, I can feel poor toward the end of the month when I have $50 in my checking account but I know I've already saved in many other ways & if shit got real I could dial everything back and have more access to cash.

2/27/2012 2:23:17 PM

as long as you have an emergency fund beyond that $50 cash in the checking account (I'm sure you do :p) I definitely agree you're doing the right thing. You think the same way we do We are also doing the HSA this year.

Depending on what my new salary ends up being this year I'm hoping to max or come close to maxing the wife's 401k. It's the last leg of my goal for both of us to max or 401ks and Roth IRAs. She's close now, and if it wasn't for student loans, which we'll finish this year, we'd already be there.

[Edited on February 27, 2012 at 2:32 PM. Reason : ]

2/27/2012 2:32:03 PM

Quote :

"Mainly I just cringe when I hear people talk about what some of their financial planners or personal finance guys/ladies tell them when, at least to me and my minimal knowledge, it often seems like bad or misguided advice."

from what i've seen, alot of people/companies that identify as financial advisors are just insurance salesmen...the financial advisor part seems to get people to let their guard down.

financial planning isn't really all that complicated for the average person. When you get into the millions of net worth and start estate planning using trusts and gifting etc is when it gets hairy, but those kind of people don't hesitate to pay good money for good money mangers

2/27/2012 4:10:45 PM

Quote :

"the financial advisor part seems to get people to let their guard down."

I think that is the key. A lot of people just just that they know what they are talking about because of the title.

On another note, the wife and I got our raises today. Went slightly better than expected, so we bumped her 401k up so that we are now finally maxing hers to the new 17,000 annually as well. Goal reached . I guess once I finish my student loans this fall I might start paying extra toward the mortgage since the Roths and 401ks are taken care of. Either that or split putting a little extra toward the mortgage and a regular contribution into my Vanguard and Etrade after-tax accounts. (Right now I just move a few hundred over here and there as I work OT or get a spot bonus etc.).

2/28/2012 4:47:33 PM

Good job. I wish I was a DINK.

2/28/2012 5:16:52 PM

haha thanks. it definitely helps a lot. We're both equally torn on that issue right now though; one part of each of us still wants 1 kid (maybe 2) like we always planned, but another part of us selfishly knows it would be easier to not have kids. She's a few years younger than me though so we'll just wait a couple more years and see how we feel then.

2/28/2012 5:37:25 PM

Ok, so I'm set to finish my student loans in September. I have been paying $550 a month (twice the minimum) for a few years now to pay them off early. When I make that last payment, I would like to continue to put most of that current monthly payment amount toward something else productive since we are already used to not spending it. The only other loan we have is our mortgage @ 4.875% and, as stated above, the 401ks and the Roths are already maxed.

My plan right now is to just split it and put $250 extra toward the mortgage principal and $250 into my Vanguard taxable account (my "Retire Early" account as I call it) that is divided evenly between these 4 index funds: VTSMX, VGTSX, VISGX, VBMFX. The long-term goal is obviously retiring earlier than the time when I could draw from the 401k and Roth earnings. The idea here was assisting in the early pay-off of the mortgage (I think no mortgage payment is hugely important for early retirement) while simultaneously building up money in non-retirement accounts that I can access before I can start drawing on my official retirement funds.

Thoughts?

PS: Yes the interest isn't terribly high (probably averaged 4.5% over the time I paid it off), so I might have made off slightly better investing money elsewhere instead of paying these student loans off early, but it will be a great feeling to have 0 debt aside from the mortgage. It was just something I wanted to get out of the way.

3/5/2012 11:59:35 AM

Sounds good. I'd ditch VBMFX for now, but that's just me.

3/5/2012 2:01:05 PM

Thanks for the feedback. You're probably right on the bonds for the short term but I've tried to keep this account very hands off. Just because, by my nature, if I start getting into buying and selling and shifting around more frequently I'll be obsessed with it and stressed out over my decisions

I attempted to pick a mix of index funds to ride for the long-haul with just some periodic re-evaluations. We'll see. Maybe a compromise is to keep my VBMFX where it is and put my new contributions into the other 3 funds for now.

3/5/2012 2:24:03 PM

Id say focus on paying your mortgage off, since all your tax advantaged accounts are maxed out. Like you said, sometimes a slightly better decision from a purely financial standpoint in trumped by the satisfaction of not having any debt.

3/5/2012 2:42:34 PM

as far as 401k concerned, does the employer's contribution count toward the $17000 annual limit?

3/5/2012 7:03:57 PM

^^I did think about putting all of it toward the mortgage at first. It's definitely something to keep in mind as I weigh my options before the fall; I'm just a little concerned about the housing market still (mainly if we didn't live here long to actually pay it off and the house came down in value while we're pumping money into it).

^No it does not. I'm contributing $17,000 of my own pre-tax money.

3/5/2012 9:28:30 PM

another thing to factor in is if you do pay down the mortgage and ever need money in the future, the interest on a home equity loan is generally deductable (for now atleast).

3/6/2012 9:32:27 AM

true, I forgot that is normally deductible.

3/6/2012 10:12:20 AM